Tuition Too High?

Tuition Too High?June 9, 2014/Michigan Future

By Lou Glazer

MLive reports that Governor Snyder in an Ann Arbor presentation complained about college tuition being too high. The article quotes the Governor: “Tuition has gone up a lot and there are two or three things that we need to do. One is: we need to keep working with the universities on managing their cost structures. We need to look at more need-based financial aid. But (we also) need to be more innovative,” Snyder said.

What the Governor didn’t say is that the major reason tuition has gone up is state budget cuts. And that the single best lever to lower tuition is for the state to reverse about a billion dollars in higher education funding cuts over the last decade. These cuts were implemented on a bi-partisan basis. Elected officials of both parties have been great at complaining about rising tuition, at the same time they have been slashing higher education funding.

As Dylan Matthews wrote for the Washington Post in the conclusion of an extensive ten part series entitled The Tuition is Too Damn High: “For public colleges offering master’s and bachelor’s degrees and for community colleges, the problem is simple. Spending has not increased much at all, but tuition has. There’s been a straightforward shift from financing based on state spending to financing based on student tuition.” (Emphasis added.)

This covers almost all public universities in Michigan, with the exception of the University of Michigan and maybe Michigan State University. Managing their cost structures is not the issue, state disinvestment is. (Matthews argues that research universities costs are going up for a different set of reasons. A lot of having to do with wanting/needing to compete for students from affluent families from anyplace on the planet who can and will pay high tuition.)

As a candidate Snyder wrote in his 10 point plan for growing the Michigan economy:

Lip service has been paid to creating a knowledge-based economy, but that transition has been delayed by cuts in funding for higher education … The state needs to reverse recent trends of under-investing in colleges, universities and community colleges. Michigan spent decades building a world-class system of higher education. The system is arguably the most import asset the state has to develop the concentration of talent Michigan needs to be successful in the knowledge-based economy.

But he like Governor Granholm before him, as we explored previously, pursued higher education funding cuts, in large part to fund tax cuts. A record 15% higher education cut in his first year in office. The inevitable result: tuition went up.

What is missing in all these complaints about tuition being too high is the benefits of those costs. Ultimately like any other product we buy the relevant question is “what value are you getting for your money?”. And here the answer is unequivocal: its a great investment. New York Times columnist David Leonhardt deals with this in a terrific piece entitled Is College Worth It? Clearly, New Data Say. He writes:

The decision not to attend college for fear that it’s a bad deal is among the most economically irrational decisions anybody could make in 2014. The much-discussed cost of college doesn’t change this fact. According to a paper by Mr. Autor (David Autor, an M.I.T. economist) published Thursday in the journal Science, the true cost of a college degree is about negative $500,000. That’s right: Over the long run, college is cheaper than free. Not going to college will cost you about half a million dollars.

Mr. Autor’s paper — building on work by the economists Christopher Avery and Sarah Turner — arrives at that figure first by calculating the very real cost of tuition and fees. This amount is then subtracted from the lifetime gap between the earnings of college graduates and high school graduates. After adjusting for inflation and the time value of money, the net cost of college is negative $500,000, roughly double what it was three decades ago. (Emphasis added.)

Let me be clear, we think that tuition should be lower. We have argued for years (see our A New Agenda for a New Michigan report) that state disinvestment in higher education is not smart. But until and unless public policy changes, higher tuition is going to be a reality as are student loans to pay for that higher tuition. And we need to portray it accurately: it is a good––probably the best––long term investment. The data are clear: rather than a crushing burden and/or an unfair cost imposed on college students, paying higher tuition, even with students loans, are a good investment that leads to much higher future earnings.